Euro weakens against US dollar on growing risk aversion

The euro weakened against the dollar by 0.60 cents yesterday, finishing the day at $1.3923.

• The euro was briefly boosted yesterday after data showed that German factory orders recorded their largest jump in two years . Orders rose 4.4 per cent in May, much better than the 0.5 per cent increase forecast.
  
• However, worries over the deepening recession resulted in risk aversion and prompted investors to buy into the safe-haven dollar, undermining demand for the euro and allow the dollar to finish up on the day.
  
• The euro weakened further against the dollar overnight as investors continue to fret that optimism about a global economic recovery has been overdone.
  
• Investors are awaiting comments on the dollar's role as the world's reserve currency before a three-day meeting of leaders of the Group of Eight industrial nations and leading developing nations in Italy that starts later on Wednesday.
  GDP figures are due to be released in the eurozone this morning as well as industrial production in Germany. In the US, MBA Mortgage Applications and EIA Crude Oil Stocks change will be announced this afternoon.